Talbot Marketing - Promotional Products

Over the past few months you may have had your Talbot Sales Associate talking to you about significant price increases that we are anticipating in the very near future.  We are hearing increases anywhere from 10 to 30%.  There are a variety of reasons for such hefty increases.  One supplier put it to me this way, "its a perfect storm". 

A vast majority of the products we sell are manufactured in China.  China has been experiencing an economic boom over the past few years (however, I don't feel they will escape the worldwide credit crunch we are feeling here in North America - more on this another time)  China as a country has been experiencing significant changes.  These changes are greatly impacting pricing on Chinese exports.  Below are some of the reasons for the price increases.

1.  The Chinese government reduced their VAT rebate.  This was a perk from the government to all businesses that exported their products.  From what I understand the last reduction of the VAT rebate caused prices at the manufacturing level to rise 14% to 17%.  There is specualtion the government will make further cuts to this VAT rebate.

2.  The exploding costs of raw materials.  The price of metals, oils, petroleum and wood has all grown significantly due to high demands

3.  New labour laws in China.  Employers are now required by law to offer their employees benefits such as an annual leave, medical coverage, insurance, over-time pay and a limit on the amount of hours worked.  To offset these additional expenses, factories have increased the price of the goods they produce.

4.  The high cost of compliance.  This is something we here in Canada are going to hear more and more of.  It is not a bad thing.  Before merchandise can be shipped into our markets the importer must prove to the Health and Safey Department that the products being delivered meet or exceed pre set thresholds established by the Canadian government.  Proof is required in the form a testing certificates from reputable testing laboratories.  These tests can cost up to $2,500.00 per product.

We foresee significant price increases.  Some are being felt right now.  Others we will not see until 2009.  Our suppliers market their products in the form of printed catalogues.  Once printed the pricing is usally locked in for the year.  A good number of our suppliers have been living with their published prices and absorbing the increases.  Others have notified us of immediate price increases.  We feel at Talbot Marketing it is our responsibility to be counciling you on the drastic changes in the marketplace, but more importantly, on how these changes can and will effect your pricing.  When your Talbot Sales Associates says to you prices are going up, it is not a sales technique to get you to place your order now.  The increases are real

Steve